As an Expat in Germany, finding the best checking account is important to avoid paying exorbitant fees. Find out how to get the best checking account.
To find the best checking account in Germany, you have to loo for the following features and option that the financial institution or product is offering:
- Free account management
- Low overdraft interest
- Free EC and credit cards
Below is a look at the questions that will lead you to selecting the best checking account
Find the best checking account
Finding the best current account among the wide range of branch and direct bank accounts is not that easy. Since every consumer has different requirements, it is not possible to determine the best checking account that suits every customer. Before switching accounts, everyone should compare many offers with one another in order to find the best current account for themselves.
When looking for the best current account, many people make sure that no fees are charged for receiving the debit card and credit card, account management, account statements, transfers and withdrawing cash from ATMs in Switzerland and abroad. Others pay attention to extras like gifts for new customers. However, it is advisable not to be blinded by the starting credit and to compare the fees and overdraft interest.
Direct bank or branch bank?
The characteristics that a good checking account should have differs depending on whether it is a direct bank or a local bank. When deciding between direct bank and branch bank, consumers must first determine exactly what expectations they have of the bank, its services and costs. Branch banks offer advice and service on site – provided there is a branch nearby – but usually charge an annual basic fee for account management. The costs at direct banks are often a bit cheaper, but the customer also has to do more himself and has no direct contact person.
Established banks and savings banks should have a dense network of branches in order to ensure the supply of cash. Instead, direct banks often offer the option of withdrawing money from third-party ATMs with a free credit card.
Germany or abroad?
If you want to choose a bank, it is best to choose one with a German branch. Foreign banks are also possible, but banks with a German branch offer the greatest security. They are subject to German laws, which are considered particularly safe, and the so-called deposit protection. The deposit guarantee protects consumers’ credit balances in the event that their bank goes bankrupt, up to a legal limit of 100,000 euros – at many financial institutions, however, the deposit guarantee goes far beyond that.
Account management fee
When looking for the best checking account , most people attach particular importance to the costs that can arise from maintaining an account. Most checking accounts have costs in the form of fees or interest. In the case of established banks and savings banks, the annual basic fee is the main factor, direct banks mostly forego this – however, they often require a certain monthly minimum incoming payment. In addition, some credit institutions collect fees for almost every transaction without a basic fee. In connection with the overdraft interest, a tidy sum can accrue annually even without a basic fee for the account management.
Credit and overdraft interest
Overdraft interest is charged if the customer overdraws his account and thereby takes out a loan . The interest rate often starts at seven percent and can be up to 14 percent. In the event of carelessness and frequent account overdrafts, the overdraft facility can become a cost trap. However, this cost trap can be avoided by keeping the current account as a credit account. This means that overdrafts are not possible, as the account must be “loaded” with money before it can be used. The overdraft interest does not apply. Another advantage of the credit account is that it can also be set up with a negative Schufa.
The opposite of the overdraft facility is the credit interest that banks can pay to their customers if the account balance is positive. However, interest on credit is rarely used in private current accounts these days. Interest on credit balances is rare, especially for current accounts with free account management. They are not a profitable investment, but are only suitable for short-term storage of salaries, pensions or student loans and for providing cash. An overnight money account with attractive interest rates is an alternative.
The service of many branch banks leaves a lot to be desired. While in the past most of the processes were carried out by bank consultants, customers can now do the work themselves at self-service terminals and machines. As a result, the account management fees are no longer justified in the eyes of many customers.
These services do not apply to the online accounts of the direct banks. This is mainly due to the fact that there are no branches and thus no on-site advice, but the customer carries out all transactions comfortably from home on the sofa. A working internet connection is a prerequisite for this. The discontinuation of the services also means that most online accounts can be managed free of charge and are generally associated with lower fees.
Which checking account suits you best?
The type of checking account you choose depends on whether you are employed, in training, retired or unemployed. There are different types of accounts for the different groups, which are adapted to the needs of their target group. A distinction should also be made as to whether the account is to be used as a private or business account .
Especially those people who have a lower income, such as students , schoolchildren or the unemployed, should pay particular attention to the fees. Most banks offer free current accounts for children or teenagers, schoolchildren and students. Overdrafts are excluded for minors and often also unemployed and Hartz IV recipients, so that only a credit account is possible. Some account models are also not available for self-employed and freelancers. In the Verivox checking account comparison you can see exactly which offer is suitable for which professional group.